Within The IMF Leadership – China Is In Front Of Germany
The IMF leadership no longer reflects the reality, the power of emerging countries being too small in comparison to their economies. The rapid pace of growth registered by China, Brazil and India could attract a greater influence for these states in the Council of Governors of the IMF.
Many developed countries could lose authority in the management of the International Monetary Fund in favor of the emerging countries which climb the hierarchy, informs the Financial Times.
Thus, China, India, Brazil, Turkey, Russia and South Korea would could get more rights within the international institution, while also having a more important say in the taken decisions. Recognizing that the current structure no longer reflects reality, the Fund has convened several meetings on this subject.
CHANGES ON THE PODIUM
The best example is China, which surpassed Japan in July, becoming the world’s second largest economy. However, Beijing has only a 3.65% stake in the institution’s decision, while Japan has a rate of 6.01%. In three of the four scenarios analyzed by Fund officials, China comes in third place, being exceeded only by Japan and the U.S., according to Reuters.
The other hypothesis placed second Chinese state. Thus, China vote in the institution’s decisions would be more important than that of Germany, France, Holland, Belgium or Switzerland. Initiative of several countries, including the United States Of America – the most influential country in the IMF, with a 17.67% stake – find more and more supporters who require structural reforms in the management of the institution. Yesterday, a group of renowned economists have submitted an open letter to the Fund, stressing the need for major changes to ensure better representation of IMF members. They want a share of at least 5% of the votes are transferred from developed countries to emerging ones. Plan aimed at reforming the institution and increase the financial resources to approximately 1,000 billion dollars.
“We urge you to support a comprehensive package of measures to address key reforms of IMF management to bring about real change in representation, inclusion and accountability within the institution,” said economists.
MORE POWER FOR THE EMERGING STATES
They hope that world leaders meeting at the World Bank and Fund meetings in early October will provide a concrete plan to address these disparities. Furthermore, the G20 states promised last year to increase the voting rights of many emerging countries. The leaders announced that a draft of such a plan will be unveiled at the G20 summit in November which will be held in Seoul, South Korea’s capital.
But that possibility did not smile all the members of the IMF. Representatives of European states in leading international institutions will lose their fear of authority. In this respect, the European Central Bank President urged them to adopt a “common position” across the structural reforms, informs Bloomberg.11